The Offer ---The Key Response Predictor

The editor of Inside Direct Mail, Ethan Boldt, interviewed me recently asking a number of questions related to the importance of the offer in generating response. The range of his questions covered the how, when and what offers to test.

This subject interjects itself into virtually every direct marketing program I touch. So I wanted to give him my best effort when answering his questions.

This blog exposes less than 15% of his questions. Answering all of the questions here would make this blog far too long.

I have come to believe that offer development and testing them separates direct marketers from the pretenders.

If you practice direct marketing programs with any frequency, then you know the major predictors of response. This list provides those predictors by priority.

1. The target market or lest selection. 2. The offer 3. The main or unique selling proposition 4. The selected medium or combination of synergistic media 5. The creative execution ( this includes such things as layout, tone, format, correlation to the brand image and so forth)

When estimating the impact, the offer usually carries 40 to 50% of the response burden if the market was targeted correctly. A good offer makes the difference between success and failure. It is not uncommon to see offers that make a difference of 200% or more in the overall response score.

Here are some of the questions the editor asked and my response to each.

Do offers impact response more than creative?

In my mind, offer development is a major part of the creative development. I do not separate these two functions. The offer is central to the creative and holds a starring role in effective direct response copy. So yes, the offer is the most important element in predicting response rates.

How do you evaluate offers? How do you test them and how often?

Direct mail is still the core medium for direct marketers. It dwarfs all other media in terms of spending levels. So we tend to use the same offers in all media once they work in direct mail.

When evaluating effectiveness, we look not only at costs per lead, but costs per sale. In the insurance business, we actually look at contract persistency by offer, medium and list source going back 3-5 years.

The offers vary by product and the particular regulations of a given industry.

For two-step offers such as lead generation, we go from inexpensive premiums to very expensive gifts like free golf clubs for agreeing to an appointment with C level executives.

The only way we test offers is through behavior testing. We tried focus groups and other pretesting methods. But they did not save us money or accurately predict response in the real world.

Do you ever test offers in email campaigns to save costs?

We typically recommend testing offers with customers. But since most of our clients do not use email for acquisition, we do not test offers via email for getting new customers.

As a general rule, we recommend testing testing offers in the core medium, and then expanding successful offers in non-core media.

For direct mail, how do you use offers in copy? On the outer envelope, the letter, the brochure, the response form?

We like to make the offer the lead.

This often mean implying the offer on the outer envelope. But we prefer not to spill the beans on the whole deal here. We want the prospect to open the envelope and read the letter as well as the balance of the contents. So the teaser copy is written to get the recipient to open the package.

In some cases, the product benefit is so strong that we prefer to state the main customer benefit on the outer envelope rather than the offer.

The strongest offers combine the reward for responding with the products' main selling proposition. For example, "Not only are we offering this product to your industry for the first time ever, but we are giving you a 50% discount for being among the first 50 customers to buy."

Once inside, each piece (except for the Business Reply Envelope) should stand alone. This means the offer and key benefits are enumerated in the letter, the response device and the brochure. The offer is indeed the star.

This does not mean that the offer always resides in the main selling proposition copy line. But it is the spark that stimulates interest and prompts immediate orders.

The interviewer asked many other interesting questions about the offer. But I will let him compile the other 80% of my missing responses in an upcoming issue of Inside Direct Mail. I will provide you with a link to this article when it is published.

What other comments do you have about offers? What results have you seen when testing your offers. How do you go about developing compelling offers?